RBI hikes repo rate by 25 bps; cuts MSF by 25 bps

In Second Quarter Review of Monetary Policy 2013-14 the Reserve Bank of India has decided to :

• reduce the marginal standing facility (MSF) rate by 25 basis points from 9.0 per cent to 8.75 per cent with immediate effect;

• increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.5
per cent to 7.75 per cent with immediate effect

• keep cash reserve ratio (CRR) unchanged at 4.0 per cent of net demand and time liability (NDTL);
and

• increase the liquidity provided through term repos of 7-day and 14-day tenor from 0.25 per cent of NDTL of the banking system to 0.5 per cent with immediate effect.


Consequently, the reverse repo rate under  the LAF stands adjusted to 6.75 per cent  and the Bank Rate stands reduced to 8.75 per cent with immediate effect. With these changes, the MSF rate and the
Bank Rate are recalibrated to 100 basis points above the repo rate.